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I have heard many times about how making just one extra mortgage payment per year can save so much money in the long run. Where should that extra payment go - only to principal, or to both principal/interest? (When I pay online, I have the option of adding $ just to one or both.)
I have heard many times about how making just one extra mortgage payment per year can save so much money in the long run. Where should that extra payment go - only to principal, or to both principal/interest? (When I pay online, I have the option of adding $ just to one or both.)
Add extra any extra amount on top of your monthly required payment as principal only. Best way to do it do your normal payment, no extra amount. Do another principal payment only as a separate payment.
Some banks automatically add any extra payment to principal. Mine does. You don't always have to write a different check but call your mortgage bank to make sure.
You need to make any extra payment apply to principal. Great way to drop huge amount off the interest and shorten the life of the loan
Just a thought, have you ever considered refinancing to a 15 year mortgage ? We refinanced from 30 years to 15 years seven years ago and it was well worth it. In 8 years we will have our mortgage paid off. If you can afford paying a little more each month it might be worth it for you. Murph
I have heard many times about how making just one extra mortgage payment per year can save so much money in the long run. Where should that extra payment go - only to principal, or to both principal/interest? (When I pay online, I have the option of adding $ just to one or both.)
If you are looking to paying extra per month, this is what I'd do:
Find the interest rate of a new mortgage with no cost, if the interest rate is lower than your current interest rate, than it is a no brainer to refinance, I say 'rate' not to be confused with ' lower payment'. The next thing is to decide how much you want to pay so your interest rate is lower so you don't have to think about refinancing again in the future.
Some people say just pay extra per month and it will be just like refinancing , make an extra payment per year, etc, they are completely wrong. A higher interest rate means you are paying more money today interest.
If you think interest rates will go up then you pay cost for a lower interest rate, if you think rates are going down , then you shouldn't pay cost. No one know what rates , job situation, family situation will be in the future. Some cases where paying cost puts can put you many years back and take you many years to get your balance to where it is today and may not make sense, figuring it out it too much thinking for many people so they just stick with a 'no cost loan' and the internet lenders love them for it.
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